Commodity Trading Trends: Silver In Focus

Silver has been experiencing a volatile year, as the safe haven metal has failed to establish itself as a safe option for an investor’s portfolio. The metal experienced two major losses on the year; in April and September silver saw crushing blows as its prices dipped by roughly $10 per ounce on both occasions. Now, the metal is fighting to make its way back up as November unfolds. Though this commodity can often be thought of as a purchase to hold in your portfolio, the past few weeks have also made silver a prime trading candidate, as its wild movements have frustrated traders around the world [see also 25 Ways To Invest In Silver].

The metal is currently sitting around the $34/oz. mark, but is subject to swing in either direction based on global trends and the like. Being an alternate safe haven investment to gold, silver tends to appreciate when markets falter, making the Greek debt scenario a positive one for this precious metal. In the current environment, investors seem to be exhibiting manic trading habits, as markets will surge one day, only to plummet the next. Silver makes for a unique trade not only because of its recent volatility or its low correlation, but because the metal has been beat down over the past few months and may have a significant way to go in either direction depending on your opinion [see also 50 Ways To Invest In Gold].

Ways To Play

For those looking to make a play on the metal, there are a number of options that will appeal to both traders and more traditional investors. From a trading standpoint, the December silver futures contract on the COMEX is trading with the highest volume of any near-term contract. Perhaps the most liquid option out there comes from the iShares Silver Trust (SLV) which measures physical bullion. The fund makes for a perfect trading option, as it has an ADV topping 33 million, but also given its physical nature, it can be an integral part of a longer-term portfolio. Finally, for investors who want something of a leveraged play on the metal, Silver Wheaton (SLW) is a popular mining firm that will usually offer a high beta on the metal [see also Three Reasons Why Gold Is Overvalued].

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Disclosure: No positions at time of writing.

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Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

2 Responses to “Commodity Trading Trends: Silver In Focus”

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  2. [...] As demonstrated above, the returns of these three assets are astronomically different, despite their fairly high correlation to one another. Note that silver prices tend to be volatile over the long term, while gold tends to be more stable. With the exception of GLD in 2009, both precious metals funds have outdone SPY each of the past four years, proving that their high correlation may not be all that big of an issue [see also Commodity Trading Trends: Silver In Focus]. [...]

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